The Government of Argentina will cut subsidies to the country’s oil-producing in the next few weeks, which will result in a slump of 25 to 30% the local value of the oil, said industry sources last Friday.
The domestic oil price in Argentina is on average above 58 dollars per barrel on account of the allowance, well above international reference prices of Brent oil, which were traded at about 46 dollars per barrel in late Friday.
The subsidy cuts are part of efforts by President Mauricio Macri to end with a large budget deficit. Vaca Muerta, one of the largest shale reserves of the world, of about 30000 square kilometers (7,400,000 acres) in the South of Argentina, has attracted investments of Chevron and Exxon Mobil, but follows largely unexplored.
The Magdalene Energy, a Canadian exploration and production company that owns approximately of 1 million acres in Argentina, said in a statement on Thursday that the price that would be received for its oil in November and December would fall in about 30%.
“Other producers confirmed to the company that received similar warnings,” wrote the company, noting that it had been informed about the drop in prices for their oil refineries for whom delivery.
A government source said that the team of Macri was negotiating with unions, companies and Governments of oil-producing provinces on the Elimination of subsidies, but the conversations are not done yet.ACESSE AS REDES DA PANORAMA OFFSHORE: